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Mortgage guarantee boost for first-time buyers in Wales

By V_Jones  |  Posted: November 13, 2012

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The Welsh Government has unveiled plans for a new mortgage guarantee scheme to help first-time buyers and people hoping to climb the property ladder.

As part of the Wales Infrastructure Investment Plan for Growth and Jobs, the scheme will be rolled out next spring and will support the purchase of up to 3,000 new build homes up to the value of £250,000.

Rather than funding being made directly available to buyers in Wales, the Welsh Government and house builders will act as guarantors so that buyers can secure high loan to value mortgages that would not otherwise be available to them.

Buyers will contribute a 5 per cent deposit.

The Welsh Government say the scheme could enable an investment of up to £500m in housing within a three year period.

Housing, Regeneration and Heritage Minister Huw Lewis said today "the innovative scheme" is good news for potential house buyers, the housing industry and the wider economy.

"Not only will it help people whose plans for buying their first home or for moving to a bigger home have stalled due to lending restrictions from banks, but it will also provide house builders with potential new customers, and therefore will boost house building which will in turn create jobs and stimulate growth," he said.

Finance Minister Jane Hutt added: "We will now be working with the Council of Mortgage Lenders and House Builders Federation to ensure the scheme is up and running by Spring 2013.”

The Welsh Liberal Democrats put forward the scheme during budget negotiations with the Welsh Government last year.

Peter Black, Shadow Minister for Housing said it will be of "immense help" to people that want to own their house and can afford the monthly repayment, but cannot gather the deposit.

Should homeowners default on the loan, any losses would be covered by any equity they have in the property in the first instance, followed by the house builder’s indemnity fund, which equates to 3.5 per cent of the loan value.

The Welsh Government would be third in line to make good any losses.

Read more from South Wales Evening Post

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  • Stork  |  November 14 2012, 1:12PM

    Neathboy234 As usual, you completely miss the point. Builders won't build new homes, unless they can sell them. At the present time, mortgages are hard to find, purchasers deposits are too low, house prices are too high for first time buyers, therefore builders are reluctant to take risks building houses they perhaps cannot sell. The days of the "ghost town" at Porthcawl's Rest Bay are over. I was involved in it when the building company built over 50 houses in one go before any had been sold. This was in the mid 1960's, and the builder employed almost every estate agent in South Wales trying to sell them. There was even an item on the Welsh tv news at that time, about the site. The builder went through, and the built houses were sold over a period of years, at a substantial loss. If you watched BBC Wales Today last night, you would have seen one of the "new affordable houses" near Pontypridd. A small two bed house at £130,000. Do you know any young first time buyers who could afford a mortgage of £123,000. There's not many of them around. The Government has tried loads of schemes like this before. Shared ownership, part rent-part buy, etc, all these schemes do is extend the new homebuyer's debt further downstream with a mill stone around their neck for almost ever. That's why these schemes don't work, and have to be reinvented. You mention building houses for an additional 15 million UK population. Most immigrants to the UK work in the retail and hospitality sector. They will opt to rent, not buy. They just won't earn enough to qualify for a mortgage. The last Government bleated on about how it would build another 3 million homes by 2020. That's 375,000 houses a year. They failed. We don't have the land with planning approval to build anything like those numbers. And the construction industry couldn't cope with an increase in housebuilding like that. The only answer to affordable housing is more building land. This will drive down house prices for new homes, and release "used" homes into the market place where first time buyers start off. This "new" mortgage scheme will surely fail, as have previous others.

  • siarad2  |  November 13 2012, 5:04PM

    @Neathboy234 I though Engalnd already had such a scheme for 95% mortgages

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  • Neathboy234  |  November 13 2012, 4:31PM

    Stork at the moment there are about 6000 new homes built in Wales every year. Down from around 10,000 a year which were built during the 10 years before the crash. Are they all going to be in llandarcy!, well the answer is no. Has someone dropped a clanger!, yes you again. For someone who says he has worked in the construction industry U don't seemed to know much about it. The fact is with out population in the UK going up by 15 million in the coming years we are going to need a lot more homes. What's more we are going to have to help your young people to make a start in life, shame this WG policy isn't being done all over the UK and on a much larger scale.

  • Stork  |  November 13 2012, 1:53PM

    And where exactly are these 3,000 new build homes going to be built ? And they will start to be ready to buy, in about four months time ? Are they all going to be at Llandarcy ? Somehow, I think someone has dropped a clanger on this one.

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